In 395 Agesilaus, who was already campaigning in Asia Minor, was given command of a fleet of 120 triremes. He decided to give command of this fleet to Peisander, who Xenophon described as a man of 'genuine ambition and of a vigorous spirit, but not sufficiently expert in the details of equipment to achieve a great naval success'. This was an acceptable arrangement while Agesilaus was campaigning in the same area, but Sparta was under increasing pressure back in Greece (Corinthian War), and the king was soon recalled home. This left Peisander to face a combination of Persia and a resurgent Athens.

The seeds of his defeat were sown when the Athenian admiral Conon and the Persian satrap Pharnabazus went to court and convinced Artaxerxes to construct a fleet. Peisander soon found himself facing this new fleet close to Rhodes, where the Spartans were probably attempting to regain control of the island. The two fleets ended up facing each other around Loryma, north of Rhodes. Peisander decided to move to Physcus, a move that took him past the enemy base. The Greeks and Persians moved out to intercept the Spartans.

According to Xenophon the allies deployed with the Greeks under Conon in front and the Phoenicians in a second row. Peisander was outnumbered, but still decided to attack. His fleet was arranged with the Spartans on the right and their allies on the left. As the battle began Peisander's allies deserted. The Spartans pressed on to attack the Greeks, but they were soon driven onto the shore. Peisander was killed fighting on his ship, after refusing to abandon ship even after it been beached. Sparta lost about two thirds of their fleet

When the news reaches Agesilaus he lied to his army, telling them that the navy has been victorious (although he did admit that Peisander had been killed). This helped keep Spartan morale high for the upcoming battle of Coronea (394), an indecisive Spartan victory.